Achieving consistently superior value growth is the single accomplishment that most clearly distinguishes great companies from all others. It is the hallmark of exceptional leaders. In our experience, a focus on value is key to achieving superior performance, and it therefore forms the basis of everything we do. Here’s how value makes a difference:
More stretching goals: Great performance starts with ambitious but achievable goals aimed at increasing intrinsic value. From the outset of every engagement, we work with clients to specify concrete performance goals for the assignment, so that they know what will constitute success. In our strategy work, for example, we help set goals for the rate of value growth the strategy should generate. In a productivity program designed to eliminate excess costs, we characterize industry-leading productivity performance to help clients create stretch goals that motivate results that will beat competitors.
Higher quality information and insight: High quality decisions need to be made in the context of high quality facts. We recognize that management judgment and intuition play an important role in decision-making, but we start with the view that any strategic or organizational decision needs solid grounding in the facts that will help unlock the most valuable insights and choices for the company – facts about the markets in which the company participates, its competitive position within those markets, what drives this position and the choices for how to improve it to drive value growth. Thus, in the early phases of an assignment, we work with our clients to develop the most relevant, insightful and value-based information, so that everyone involved in the decision has a common understanding and factual context for the choices they need to make.
The search for better answers: Too often, decision-makers can head down one single path and miss the opportunity to find more inventive, distinctive and valuable solutions. Companies that focus on creating maximum value recognize that getting to the best answers means getting all viable alternatives on the table and making clear and concrete choices based on economics, not emotion or bias. These alternatives must be specified at a level of detail that underscores their impact on the company’s intrinsic value. We help clients identify alternative courses of action (usually between three and five) to address an issue or opportunity, and we explore the implications of these alternatives: How will they impact the company’s performance, competitive position and value? What trade-offs do they create and how are these trade-offs addressed? What new capabilities and investment will be required? And how executable will each alternative be?
Better prioritization of top management time and investment: Most organizations have hundreds of competing priorities, all with the potential to create significant claims on the company’s resources and on top management’s time. Without an objective way of setting priorities, ideas that "sound right" or come from the people who speak loudest get the investment funds and can crowd out more important issues. Value is an objective criterion for setting priorities and enables top management to focus its scarce time and resources on the highest value-at-stake issues and opportunities.
Better and more general managers within the organization: Focusing on value means creating accountability for managing value at all levels within the organization where units with reasonable strategic autonomy can be created. This invariably creates additional general manager roles for high performing individuals to be provided with the opportunity to develop their commercial and people management skills; and in the process enables the organization to develop a deeper pool of high quality management talent.
